ECN 203 Study Guide - Quiz Guide: Ceteris Paribus, Opportunity Cost, Table Table
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Concepts of the model; should be able to calculate: total utility (tu), marginal utility (mu), marginal product (mp), and value of the marginal product (v) With just one option and assuming no scarcity: continue on until reach bliss/ satiation point. This is where mu = 0: know how to calculate marginal utility and total utility, should be able to calculate tu and mu. With several options and no scarcity: reach bliss/ satiation point, mu1= mu2 = . =mun = 0. With several options and scarcity: cannot reach bliss/satiation point. Do each until utilities are equal across all options: mu1= mu2 = . =mun= x (where x>0) How do future consequences and risks affect our decisions: define present value, discount rate, risk and uncertainty. Numerical examples: the following table shows joe"s total utility (tu) and marginal utility (mu) for gizmos. Fill in a, b, c and d. if gizmos are free, when will joe stop consuming gizmos: scenario: jill produces widgets.
